Demand for residential properties in Salt Lake City and other big cities in Utah have been consistently high, but home buyers should know that there are other places where average property prices and cost of living are more affordable.
Whether you plan to take out a loan for your first or second home, interest rates in Utah will still vary based on your credit records. It’s necessary to keep a close watch on your actual FICO score since not all lenders use the same evaluation system, especially for FHA loans.
The Cheapest Places in 2019
An analysis ranked Washington Terrace as the most affordable place in Utah for this year. A median-priced home in the city costs $149,400, while the average income there amounts to $53,070. In other words, residents would only spend around 2.8 times their salary to have their own house. The home price-to-income ratio served as an essential factor to determine the affordability of each city listed on the analysis.
Based on this factor alone, buyers in Sunset would only have to spend 2.4 times of their average income worth $56,864 to buy a house priced at $138,600. Roy is your second-best option with home prices amounting to $163,900 on average, which might mean spending 2.5 times of a $66,333 median income to afford one. Most of the affordable places are located in the northern part of Utah.
Should You Save Money for Down Payment?
Some people have decided to save money on down payment to reduce the costs of taking out a mortgage, but it takes a lot of time and discipline. For instance, if you save $200 every month for a 10% down payment on an average-priced house in Washington Terrace, it would take you 6.25 years to save $15,000. By that time, the value of your money has likely fluctuated while prices likely have increased over the years.
Your credit score will partly affect the actual down payment. Home buyers with a limited budget often depend on an FHA loan to reduce the upfront costs. A person with a score higher than 580 usually qualifies for a 3.5% down payment. On the other hand, someone with a score below the same number would have to pay 10%.
While saving money for a down payment is still a good option, you shouldn’t neglect the importance of your credit score, especially if your cash on hand isn’t enough for a down payment. Take note that some mortgage lenders won’t be willing to accept your application if you have a credit score between 500 and 579.
Affordable housing and low cost of living are relative to the amount of your income. If a household in Salt Lake City earns $100,000 per year and spends $40,000 on housing expenses, it would remain a cheaper place compared to a home in Washington Terrace with a combined income of $50,000 and housing costs worth $20,000. Find a mortgage lender that understands your financial situation and help you with reaching the best option for a home purchase.